Young technology entrepreneurs, who are used to filling their companies with twentysomethings, are learning that it’s important to have employees on the payroll who have been there and done that.
Tech start-ups are increasingly seeking experienced professionals from the corporate world to take over critical functions such as development, marketing, finance and human resources, experts and industry officials say.
“By the time they have completed an initial public offering, they have reached a business size that they can’t handle by themselves,” said Joseph Gallagher, a consultant at Watson Wyatt Worldwide in Dallas. “The entrepreneur begins to understand they are no longer a small coterie of buddies.”
Some come to the realization much sooner.
Jayram Reddy, chief executive of MindFlow Technologies Inc. in Plano, Texas, says he has tried to balance youth and experience in his year-old software company.
MindFlow is a private company with 50 employees.
“What we look for is: Are these people hungry?” Reddy, 34, said. “If you are hungry, it doesn’t matter how old you are.”
But he said he’s careful in hiring older executives and managers because many don’t share his enthusiasm for technology and its capabilities.
“People with a lot of experience can bring in a lot of baggage,” he said.
Reddy’s sixth employee was Tricia Conover, who has had 17 years of software marketing experience.
Conover, who’s in her 40s, is MindFlow’s vice president of sales and marketing. Though she has had jobs that pay better, Conover said she is excited to be working at a company that has a chance at becoming the stock market’s next darling. All MindFlow employees receive stock options.
Experienced professionals, or “gray hairs” as they are called in start-ups, often take a chance on new companies because they have a nest egg, Conover said.
“I have been in situations where I made more cash,” she said. “But I am not hurting my standard of living by what I accept on the salary side.”
The lure of start-ups is so strong that many established corporations are beefing up their compensation packages and relaxing workplace rules to keep employees from leaving.
Guy Hoffman, a partner at TL Ventures in Dallas, said stock options make it possible for start-ups to hire experienced talent.
Hoffman, who invests in new companies, said he wants young entrepreneurs to surround themselves with people who can execute the firm’s business plan. “The entrepreneur can bring the vision, but they don’t have the experience to understand how that vision is going to manifest itself,” he said.
But not every pairing of youth and experience yields a successful business.
“Problems crop up when the experienced executive doesn’t have sufficient respect for the young entrepreneur . . . or when you get a young entrepreneur who thinks he knows everything,” Hoffman said.
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One problem is that experienced professionals have to deal with a more informal culture when they go to work for a start-up.